Waiting For 2011 Budget
In the next six weeks, many Nigerians who are lucky would gladly usher in the New Year with fanfare. But this may be without a very important instrument that is pivotal to making any celebration worth its while, the budget. The sad situation is a source of worry to many, including the nation’s legislators. Like many concerned Nigerians, the House of Representatives is troubled by the delay in the presentation of the 2011 Appropriation Bill, and its supposed forerunner, the Medium Term Expenditure Framework, MTEF.The views expressed by the House are not unfounded. It has become a tradition for the executive arm of government to delay until it is too late in the current year for presentation of the national budget to the National Assembly. The implication of this is grief, as it is likely to throw spanners in the works at the implementation level of the budget by the various Ministries, Departments and Agencies, MDAs, of the government. Perhaps the delay could be classified as one of the major reasons for sloppy and near non-implementation of the appropriation act by the MDAs every year. When this happens, it paves way for the implementers of the budget to dip their itchy fingers into the public coffers to feather their nest at the expense of the people.The MTEF was adopted in 1998 as part of a wide package of budget reforms, which included the Intergovernmental Fiscal Relations Act of 1997, IGFRA. That year, for the first time, the annual budget included a 3-year spending plan. Although only the single upcoming fiscal year is voted on by Parliament each year, the government presents numbers for the following two years as well.The MTEF is a tool to encourage cooperation across ministries and planning over a longer horizon than the upcoming fiscal year. This holistic approach is preferable to piecemeal, reactive, short term decisions that ordinarily characterise budgeting and enhance stability. The MTEF enhances stability by letting the three tiers of government know what resources will likely be available to them. This allows government’s planning to be more credible and accurate and encourages investment by making taxation, interest rates, and government spending more predictable.It improves transparency and can generate public discussion. It does this by making government’s long term policy goals and overall strategy for getting there, publicly available. Outlining future spending provides a signal to civil society and the public at large of government’s priorities and how it intends to implement its vision. It facilitates programme evaluation. The future predictions also provide a baseline for assessing the effectiveness of the past year’s programmes.As preparations for next year’s general elections enter top gear, genuine fears are emerging that the 2011 budget will be lost in the whirlwind of political activities at least, for the foreseeable future. This is however not an isolated case as late passage of budgets has become a trend in the last decade. This practice reached its peak in 2008 when the budget was passed in September, three months to the end of the fiscal year. This led to a less than 30 percent implementation of the budget.The greater part of the 2008 budget was already spent through extra-budgetary expenditures by the time it was passed into law. The Senate and the House added N500 billion and N491 billion respectively to the N2.4 trillion that was proposed by the late President Umaru Musa Yar’Adua. Yet, at the end of the fiscal year, nothing concrete was achieved. Most significant was the lack of progress in the railway sector, which was supposed to be addressed by a significant portion of the budget. The 2009 budget did not fare better with its passage into law delayed till February and its implementation as poor as its immediate predecessor. The 2008 budget was presented to the National Assembly in December, 2007. That of 2009 was laid before the parliament in October 2008, and passed in February 2009. The 2010 appropriation bill was presented in October 2009 and was passed in March 2010.Members of the House also acknowledged that in the last three years, the 2010 budget was the most comprehensive in terms of revenue framework and observed that this advantage has not translated into tangible results due to the alleged sluggish selective implementation.There are other unpleasant consequences that befall the nation when the budget is presented late. For example, the claim by the House that it recovered a whooping N5 trillion unspent funds over the last three years is a glowing testimony to this. Indeed, the chairman, House committee on media and public affairs, Hon. Eseme Eyiboh who disclosed this to press men stated categorically that the funds were hitherto frittered away by the MDAs but have now been recovered and ploughed back into the public treasury. It can only be imagined, the difference the huge unspent funds would have brought to the people had the money been judiciously utilised for the projects appropriated.Aside this, worries over delay in presenting the budget stem from the need to, not only pass the appropriation bill on time to set the economy on track ahead of a crucial election year, but to give the legislators ample time to scrutinise it in detail, devoid of undue pressure from various quarters for accelerated passage. When it gets to the National Assembly late, the budget may not undergo the basic and necessary legislative checks.There are other dangers that arise from delay in the budgeting process. Mr. David Akighir, an economist and political analyst mentioned that an Appropriation Bill that is presented late to the National Assembly naturally demands an accelerated hearing. This gives the legislators less than enough time to digest the bill and make necessary corrections. These accelerated hearings make room for errors in the final budget such as overestimation of expected prices as well as production quantities of crude oil. “This would obviously lead to deficits, and expectations of the fiscal year would not be met.“If the budget planning process is properly designed and enforced, time would be made for adequate research in order to accurately estimate sensitive indices for revenue and expenditure in the coming year such as crude oil prices, currency exchange rates and the amount of expected foreign investments.”He went ahead to explain that a poorly planned budget will definitely not address issues of national development adequately, which is why Nigerians are yet to feel the positive impact of previous budgets. He added “for Nigerians to enjoy the benefits that are projected in a budget, the budget needs to be passed weeks ahead of the commencement of the fiscal year. That way, the budget would have the full 12 months to run its course.”Newsworld investigation revealed that this trend has been on since the return of democracy to Nigeria. The effects of this practice on the Nigerian economy as explained by economic experts are dire. With the first quarter of 2011 poised to be dominated by electioneering activities, the budget will very likely go the way of its predecessors: be passed late and be poorly implemented.It is common knowledge that the journey of a successful or failed budget starts from the planning process. The responsibility for this rests on the shoulders of the Budget Office of the Federation. We made several visits to the Budget Office to ascertain the stage of the planning process for next year’s budget. But in one of the offices visited, our reporter was given a sarcastic response. Hear the officer: “You can go to the national assembly if you want to know anything about the budget.”Such responses are indicative of a body that is at loss as to its purpose and functions. This is the third week of November, and it is expected that budgetary activities should have reached an advanced stage but nothing seems to be happening as evidenced by the silence on the issue, though, the Federal Executive Council recently approved a budget proposal of N4.56 trillion for the 2011 fiscal year. This proposal however, is yet to see the halls of the National Assembly. One is tempted to conclude that this situation is a pointer to the direction of government, which tends to focus on matters of political succession.The delay in designing and forwarding the budget to the National Assembly coupled with further delays that are likely to be encountered before the Appropriation Bill is passed by both chambers of the legislature all mean that the economy would again languish in uncertainty for the first few months of 2011.Head of Economics Department, University of Abuja, Dr. Joseph Obansa told this magazine that late passage of the budget would invariably lead to its low implementation. He said the poor state of the economy can be traced to late passages and the poor implementation of budget. In his words, “poor budget implementation negatively impacts the economy in several ways.“Development objectives for the fiscal year will fail to be achieved, which means monies voted for certain endeavours are not spent and end up being sent back to government coffers and money not spent cannot influence the economy positively.” He further said it is the responsibility of government to provide infrastructure such as power and roads to create a conducive business environment.Delays in budget passage means money is not being spent on provisions for these infrastructures. This forces business owners to provide these expensive services themselves driving up production costs as well as prices. This in turn reduces the competitive edge of the indigenous firms and they find it difficult to grow.Dr. Obansa, noted that government should take a cue from the fact that the budget is the key instrument through which elected officials and the powerful elites are expected to choose what services are to be provided and which areas are to be left to the private sector of the economy. “It is also the principal instrument of fiscal policy used to encourage stable growth, sustainable development, prosperity, and optimum employment in the economy. The budget spells out the degree of activities and costs, as well as the specific plans required for the implementation of the programmes,” he further stated.Mrs. Halima Umar, a management staff in the audit department of a foremost ICT company sees it differently. She attributes budget failures to poor implementation with emphasis on lack of monitoring. She believes that “an independent budget monitoring agency in the mould of EFCC should be established and charged with the responsibility of ensuring that MDAs fulfil the provisions of the Appropriation Bill to the letter.”According to her, all MDAs should be mandated to give progress reports on budget implementations at the end of every quarter. The budget monitoring body should also release reports of budget performance every quarter so as to give a clear picture as to whether or not the implementation is in tandem with the budget itself. This body should also be charged with the responsibility of probing and prosecuting defaulters. “While ensuring that citizens enjoy the full benefits of the budget, this body will also serve as a check on corruption by government officials,” she concluded.When the budget is poorly implemented, the executive and legislative arms of government resort to trading of blames instead of working jointly to ensure that the practice is stopped. Senate committee chairman on information and media, Senator Ayogu Eze told the media that “they would like to find out what the problems are and why they are not implementing other aspects of the budget.” Nigerians have heard such statements over the years but under-implementation of budgets still persist. David Mark, Senate President and Dimeji Bankole, Speaker, House of Representatives have at several times accused federal MDAs, of sabotaging the collective efforts of the executive and the legislature to ensure delivery of dividends of democracy to Nigerians. Former Finance Minister, Shamsudeen Usman had, while reacting on the poor performance of the 2008 budget blamed the National Assembly for the delay in the passage of that year’s Appropriation Bill.Meanwhile, the National Assembly is presently spoiling for a showdown with the Federal Executive Council over the inability of the executive to implement an approved national budget. Hon. Ayoade Ademola Adeseun, chairman, House committee on appropriation, insisted that government is not ready to grow the economy. In a chat with Newsworld, in his office, Ayoade noted the glaring differences on claim of implementation rate between the legislature and the executive. According to him, while the legislature is insisting that the rate of implementation is 20 percent, the executive is claming 60 percent implementation, thereby necessitating a meeting last week involving the House committee on appropriation and the Federal Minister of Finance, Mr. Olusegun Aganga, as well as the budget office.On the delay over the laying of the 2011 budget estimates before the National Assembly by the president as constitutionally provided, Mr. Ayoade attributed the cause to the festering disagreement between the executive and the legislature over the rate of implementation. He insisted that until the grey areas over the implementation of the 2010 budget are cleared, the legislature is certainly not ready to receive a fresh estimate on the 2011 budget.Dismissing insinuations from certain quarters that the budget presentation delay caused by the previous seniority squabble between the House and the Senate on which floor the president should lay the budget, Hon. Tafa Omar, from Bauchi, argued that the issue at hand is on why the government does not take seriously budget implementation and why the 2011 fiscal estimate is yet to see the light of the day. According to him, the idea of seniority squabble is a creation of mischief, as the president is free to lay the estimate in any of the chambers he so wishes. He argued that rather than looking towards the National Assembly on delayed budget presentation, the executive should be made to give reasons for not only failing to execute approved estimates but also falling behind schedule in laying the estimates before the National Assembly.Attempts made by Newsworld to reach out to Senator Ahmed Markarfi, Chairman, Senate committee on finance and Senator Iyiola Omisore, Chairman, Senate committee on appropriation, was rebuffed by their respective aides. Even the executive acknowledges the need to lay the budget early before the National Assembly, its subsequent passage and implementation. Weighed down by these burdens, a two-day workshop on budget implementation was held in February at the Transcorp Hilton Hotel, Abuja. The theme of the workshop, which was declared open by then Minister of Finance, Dr. Mansur Muhtar, OFR, was: ‘Strengthening Budget Implementation for Enhanced Project Execution and Service Delivery.’The Director General, Budget Office and the Minister of Finance, in their welcome addresses, both expressed their concerns over the low level of budget implementation but also recognised the challenges faced by MDAs in implementing the budget effectively. They noted that many MDAs were able to effectively implement strategies to improve their capital budget implementation rates, from an average rate of about 20.68 percent as at the end of March 2009, to an average rate of about 60.59 percent as at 31 December 2009, excluding the 2009 Supplementary Budget.A few of the MDAs were able to achieve relatively high rates of capital budget implementation. For instance, Agriculture & Water Resources 83.59 percent; Federal Capital Territory Administration, 77.67 percent; Education 65.21 percent, Niger Delta 66.55 percent; Interior 66.42 percent and Defence 82.2 percent; Unfortunately, many more were unable to effectively utilise the financial resources placed at their disposal to deliver on the priorities of government. Some MDAs with relatively low levels of implementation include: works 47.53 percent, Aviation 35.37 percent, and Petroleum Resources 22.68 percent.Development of the critical areas of the economy through quality spending activities were identified as essential for the realisation of the present administration’s Seven-Point Agenda, the MDGs and Vision 20:2020. They emphasised that the purpose of the workshop was to identify both the technical and non-technical challenges to budget implementation, with a view to addressing them so as to ensure improved budget implementation and enhanced service delivery for the benefit of all Nigerians. The workshop was attended by about 1,000 participants drawn from across 15 MDAs, the National Assembly, extra-ministerial departments and agencies, civil society, academia and the media.After extensive deliberations at both the plenary and break-out sessions, the forum arrived at certain recommendations to strengthen budget implementation for enhanced project execution and service delivery.On the importance of planning, it urged the MDAs to properly plan for their projects and programmes to improve the prospects for effective budget implementation and reduce the incidence of abandoned projects.Another area agreed on was accelerated budget appropriation. To address the issue of late passage of the Appropriation Bill into law, it recommended that the budget preparation process should commence early in the fiscal year and key stakeholders such as the National Assembly should be actively involved early on in the process as this will allow for accelerated passage of the Bill when it comes before the National Assembly.Judging from the prevailing situation, it is obvious that all the recommendations are observed in the breach. This practice of trading blame has not done any good, especially the economy. It is important that the two arms of government focus more on how to stop this trend of delayed passage of budgets as the continued under-performance of budgets is robbing Nigerians of monies needed to bolster economic activities and enhance infrastructural development, which will in turn improve the country’s GDP and other indices of economic performance.